Question

On December 31, there were 26 units remaining in ending inventory. Using the FIFO inventory valuation method. What is the cost of the ending inventory? A company had the following purchases during the current year.
PurchasesJanuary: 10 units at $120February: 20 units at $130May: 15 units at $140September: 12 units at $150November: 10 units at $160
$3,280.
$3,200.
$3,445.
$3,540.
$3,640.

Answer 1

Answer:

The cost of the ending inventory is $3,960

Explanation:

Under fifo method of valuation the unit are expensed in cost of good sold statement in order of their purchase. The purchase price of unit purchase first are charged in profit and loss account when sale is made. So the cost cost assign to ending inventory will be that of last purchase made. Detail calculation is given below.

Total Stock Remaining =26 units

10 units at 160 dollars    = $ 1600

12 units at 150 dollars    = $ 1800

4 units at 140 dollars      = $ 560

Total value                      = $3,960

Answer 2

The cost of the ending inventory is $3,960

Since 26 units is remaining in ending inventory while  September has  12 units and November: has 10 units.

Hence:

26 units-12 units-10 units=4 units

Now let determine the Ending Inventory

Ending Inventory=(4 units × $140 ) +(12 units × $150)+ (10 units × $160)

Ending Inventory= $560 +$1,800+ $1,600

Ending Inventory=$3,960

Inconclusion the Ending Inventory is$3,960

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